Mar. 3, 2013

Gaming experts say it's essential that the Horseshoe persuade the Downtown crowd to stop by and gamble once or twice every week. / The Enquirer

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When Horseshoe Casino Cincinnati opens Monday, it must focus on making its most frequent customers out of those closest to home: the 13,000 people who live Downtown and the 60,000 who work in offices there.

Gaming experts say it’s essential that the Horseshoe persuade the Downtown crowd to stop by and gamble once or twice every week. Residents and after-hours workers will be crucial for the casino to achieve its goals of 6 million visits and $300 million in gambling revenue a year – or $304 every day for every chair at a slot machine or gaming table.

“Downtown’s got great properties to tap: P&G and Kroger, and we’d love to get those people to stop by for dinner or a show,” says Kevin Kline, casino general manager and a senior vice president with operator Caesars Entertainment Corp. “People will come for a half hour, an hour or longer and it will become part of your week.”

Kline won’t reveal details about strategy. But the Downtown market is clearly a vital part.

Caesars executives are touting the Horseshoe as a true entertainment destination, not just a gambling hall. If locals are drawn to an event inside or a concert on the plaza outside, they might stay to gamble.

If they drop in for a bite to eat at one of the casino’s seven restaurants, they might stay to play a few rounds of Blackjack or the slots. And if they build up enough “loyalty points” playing the games, they can get free or discounted meals at Downtown restaurants they already like to visit.

Wendy Hamilton, general manager of downtown Philadelphia’s SugarHouse Casino, calls it capturing the “frequency market.” Downtown casinos like hers – and Cincinnati’s – must rely on frequent business that’s spread out over the entire week, she says.

That’s diffferent than “destination markets” like Atlantic City or Las Vegas, where two-thirds of the money comes in over the weekend from customers who visit infrequently but stay a couple of days at a time.

Hamilton says the lifeblood of her casino is the local resident or after-hours worker who stops by twice a week for 30 minutes at a time. If downtown workers are tempted to go home first, the SugarHouse risks losing them to one of three suburban casinos about 20 miles away.

In Cincinnati’s case, the competition comes from three casinos in southwest Indiana. Next year, slots at River Downs in Anderson Township and Lebanon Raceway in Turtlecreek Township will only increase the pressure to win potential customers closest to home.

Goal: Do better than Cleveland

A closer look at the numbers shows why the frequent, Downtown visitor is all so important to Horseshoe as it establishes core customers in a crowded market.

Developer Rock Gaming, which owns a majority of the Horseshoe and hired Caesars to manage it, also runs Horseshoe Casino Cleveland, which opened May 14.

Horseshoe Cleveland has raked in $197.1 million in gambling revenue during the eight and half months ending Jan. 31.

With 117 gambling tables and 1,849 slot machines, Cleveland’s Horseshoe has about 2,551 gaming positions – or chairs for gamblers. So far each of those chairs rakes in $294 daily.

In Cincinnati, Rock and Caesars officials want to earn even more – $304 daily for each of 2,708 gaming positions. But Cleveland has no competition and Cincinnati does: 6,710 additional seats at three competing casinos just a short drive away in Indiana.

Consider the numbers in another way: Cleveland currently has one gambling seat for every 811 residents in the market. Cincinnati will have just 227 potential customers per seat.

Casino officials acknowledge that business has been softer than expected in Cleveland. And they agree that competition will be even stiffer once River Downs and Lebanon Raceway add slots.

Still, they stick by the numbers.

“I feel very good about our projections,” Kline said. “At the end of the day, I think we’ll be the No. 1 casino in the region.”

A market flooded with choices

No one at Horseshoe Cincinnati is saying that Downtown residents and workers are the only customers to snare. City-dwellers, suburbanites and out-of-towners are valued, too.

But different groups will listen to different pitches. And for Downtown residents and workers, the casino’s trick is to be seen and heard. Hamilton says that means using unique brand-building tools.

Advertising on the tops of taxicabs and wrapped around buses are only going to be seen by those in the city. Community sponsorships and involvement create connections and a deeper association with the city.

Hamilton noted that SugarHouse took over as the title sponsor of Philadelphia’s signature “Mummer’s Parade” attended by tens of thousands on New Year’s Day but which had fallen into financial straits.

“That parade is as much a part of the fabric of Philadelphia as cream cheese,” she said.

She added that SugarHouse’s financial support and employee participation in a downtown nonprofit that funds neighborhood improvements also has bought the casino greater downtown visibility and goodwill.

“That’s so big – we are so looped in with our neighbors through that,” Hamilton said.

Experts say talk about partnerships, connectivity and new excitement over Downtown isn’t just happy talk, but a key part of the strategy.

In a market flooded with choices, a casino must differentiate itself. By partnering with outside restaurants, hotels, entertainment and sporting events, the Horseshoe is leveraging its proximity to area attractions, which is why city dwellers choose to live Downtown in the first place.

Hamilton said she uses the same strategy for the SugarHouse in Philadelphia. She notes that a reliance on regular short, frequent visits by customers forces her two restaurants to keep changing their menus to keep things fresh.

Nonetheless, her customers wouldn’t stand for just two eateries. Instead, the SugarHouse comps and refers frequent players to nearby restaurants – which keeps them coming back.

“When you come here twice a week, you eat everything on the menu and it gets old fast,” she said. “That’s the beauty of being downtown – there are so many options.”

Caesars is using the Horseshoe’s high profile and heavy traffic to negotiate discounts with the 10 restaurants and seven hotels it has partnered with so far.

The strength of Caesars’ Total Rewards loyalty program also will prove to be a potent weapon in the Horseshoe’s battle for market share. Competitor Hollywood in Indiana offers cross-promotions with its casinos in Toledo and Columbus.

But that’s nothing compared the cross-promotion Caesars’ brings to the gambling table. For local gambling enthusiasts, Horseshoe will not only grant points that can be spent on meals at Moerlein Lager House or a stay at posh 21c Museum Hotel, but it will encourage gamblers to rack up loyalty points that can be redeemed on trips to Las Vegas, Atlantic City, New Orleans and elsewhere.

“We promote value that competitors can’t provide,” Kline said.

Caesars has 250,000 Total Rewards members who live within 100 miles of Cincinnati, including about 40,000 in the city. Those membership numbers are expected to climb quickly.

I cover the institutions that are financing and impacting the economic development of our region. Email acoolidge@enquirer.com